FX.co ★ Chinese leaders pledge 'moderately loose' monetary policy to spur economic growth

Chinese authorities are determined to stimulate economic growth. According to Reuters, citing an official readout from a meeting of top Communist Party officials, the country will adopt a "moderately loose" monetary policy in 2025.

Chinese policymakers are ready for a proactive fiscal policy and "unconventional counter-cyclical adjustments," according to state news agency Xinhua.

These statements were made in an official announcement during the annual Central Economic Work Conference, where China's top officials outline key goals and policy initiatives for the coming year.

In 2025, China's government aims to achieve "progress while maintaining stability." This progress is intended to ensure economic balance and promote innovation.

The statement emphasized the need for an active fiscal strategy and a moderately loose monetary policy, with a focus on strengthening counter-cyclical adjustments when needed.

This marks the first shift in China's monetary policy stance since late 2010. The People's Bank of China has identified five types of monetary policies: loose, moderately loose, prudent, moderately tight, and tight. The central bank's stance allows for flexibility in either direction for each type, indicating that the trajectory could shift toward either easing or tightening.

Notably, China adopted a moderately loose monetary policy after the global financial crisis in 2008. Later, in 2010, it switched to a prudent stance. Now it has entered a new phase that could bring some surprises.